AT POLITICAL gatherings people often spend much of their time talking about other events they have attended. At a conference (organised by The Economist) in the Nigerian capital, Abuja, on October 20th a high-level participant related the following story. President Goodluck Jonathan recently invited a group of top entrepreneurs to a cattle ranch to discuss how to generate economic growth. At one point he handed each attendee an unmarked brown envelope. Eyebrows raised around the room. Mr Jonathan frequently speaks out against corruption. He motioned for the tycoons to open the envelopes. Inside they found not cash but blank pieces of paper, on which he asked them to each write the names of three rent-seeking officials who were hurting their business, promising to investigate.

In April the president won re-election after pledging—like every other candidate—to boost the economy. He then spent several months putting together a new cabinet. He lured Ngozi Okonjo-Iweala, the Nigerian managing director of the World Bank in Washington, DC, back home to act as super-minister for finance and the economy. Olusegun Aganga, her respected predecessor at the ministry and once a Goldman Sachs banker, swallowed his pride and stayed on as trade and investment minister.

The outspoken central bank governor, Lamido Sanussi, completes what some call a dream team (others have labeled it a "scream team". Rivalries among the economics tsars were inevitable; turf boundaries are still uncertain. But the three, who have been working together for two months, do generate a palpable sense of momentum in the Nigerian capital. On October 18th, they set up country's first sovereign wealth fund, hoping to limit the perpetual plunder of oil revenues. They seem willing to pull out many stops to create jobs and raise incomes. The economy is growing at around 7% and Standard Bank predicts it will overtake South Africa's by 2015 as Africa's largest.

But so far the president has failed to meet the high expectations that accompanied his re-election. His signature policy, a plan to liberalise and privatise the power sector, has fallen visibly behind schedule. Most Nigerians are unlikely to receive more than a few hours of mains electricity per day for many years—the single biggest bottleneck in the economy. If this is not dealt with soon, Nigeria's hopes of becoming a G20 economy in the next decade will remain fanciful, despite its vast size, plentiful resources and undoubted entrepreneurialism.

The warning signs are there. Unemployment has reached a new record. Inflation has spiked. The currency, the naira, has dropped out of the exchange rate bracket set by the central bank, which in turn has raised interest rates to 12%. This may not be enough to check inflation or prop up the naira but it will surely hinder growth.

The sense of crisis is compounded by the proposed phasing out of fuel subsidies. The move is sound. The Nigerian government spends billions of dollars every year on ensuring that refined fuel it buys on international markets retails for only 60 cents a litre. Smugglers take some of it to neighbouring countries for resale at full value. Better to spend money on roads and power stations. But poor Nigerians fear that savings will instead be pocketed by the corrupt governing class. Subsidies, they say, at least bring us some benefits. Demonstrations and strikes looms. Anyone who expects any fundamental change in the way Nigeria is ruled clearly has no understanding of who these rulers are, and why (or how) they got into positions of power. Mr Johnathan, for example, is a direct beneficiary and product of the very system he claims to want to reform. How very likely is that? At any rate, how can he (or anyone else, for that matter) conceivably effect any such change without first creating the necessary state institutions and infrastructure without which no policy can possibly be translated into results? (When I say "institutions," I mean something in place of the utterly rotten, irredeemably corrupt and sclerotic bureaucratic machine that we call the civil service. I also mean the judiciary, the police, and all those other bodies that currently constitute an impediment to any kind of progress. And by "infrastructure," I mean roads, communications, electricity, water, healthcare, emergency services, etc., not space programmes and airports with no apparent commercial purpose.)

And how can these reforms ever take place when the sole function of every Nigerian regime since independence has been the unrestrained allocation of oil resources amongst friends and political allies within the ruling elite - a cancerous, self-reinforcing and deeply-entrenched culture that clearly cannot possibly lend itself to any meaningful reform?

If a supposedly oil-rich "nation" cannot provide its longsuffering people with electricity or pipe-borne water half-a-century since independence, something is terribly wrong with it - and no number of meetings in cattle ranches or in caves can possibly change that. For, the problem, in sum, is Mr Johnathan himself (and his chums in the ruling party) - and before him, Yar'adua, Obasanjo, and all of those we all like to lionize as the "fathers" of our independence struggle. But if we as Nigerians really wish to bring about the kind of change we always claim we want to see, we need to find a way, very urgently, of ensuring that the very worst amongst us don't keep finding themselves in positions of power.

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nwabu 

Oct 30th 2011 5:15 GMT

I think in general President Jonathan has a slow hand, a soft voice but so far has made smart personnel decisions. He took time in choosing the members of his team but placed some outstanding individuals in key ministries. Apart from Okonjo-Iweala as Finance Minister, Dr. Adesina as Agricultural Minister and Prof Bart Nnaji as Power Minister stand out as strong technocratic minds. With his invitation of sound businessmen into the federal inner circles and on trips abroad it marks a different way of engaging the private sector.

Of course the legacy of corruption and mismanagement Jonathan inherited in Nigeria runs deep and is damning. Its rotten infrastructure makes it one of the world's worst places to do business with its industrial component as a percentage of GDP a miserable 4%.Its chaotic and generally horridly planned cities are choked with a sea of mainly untrained and uneducated youth scrambling for a living.

The Jonathan administration cannot turn Nigeria around in 4 years but it can push Nigeria away from the edge of lawlessness towards economic and political stability.

* The privatization of power may be delayed but as long as the political will is there then its critical to bring industry back into Nigeria together with western capital and expertise.

* The Jonathan administration's efforts in agriculture will do more for poverty alleviation and national savings than any fuel subsidy can do because food constitutes the greatest expenditure for most Nigerians.

* In terms of fiscal management, Nigeria needs quality expenditure not necessarily a sovereign wealth fund and Okonjo-Iweala should rather concentrate on fixing the ridiculous amount devoted to subsidizing indolence in the many federal ministries through recurrent expenditure and improve the budget and project monitoring of road, rail, water, education and health capital projects.

* Fuel subsidies will result in riots because marketers like Oando, AP and Conoil are heavily indebted and a removal of subsidies will result in higher than world prices and in a consequent increase in food and transport costs which will hit the poor heaviest. The jonathan administration should phase out subsidies slowly and tie them to output from new refineries.

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keni93 

Nov 3rd 2011 3:35 GMT

Honestly - don't throw all the blame on Mr. Jonathan. All of this is the result of a long line of unqualified leaders combined with unstable plans, unfilled promises, a bad infrastructure and a failing economy. Before South Africa can blame the leader for all that's going on, I think they need to have a grass-roots change that involves restructuring a lot of things. It's not just the currant leader of a country that holds the fate of his country on his shoulders.

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Mnotho 

Nov 4th 2011 0:05 GMT

After so much looting of Nigerian resources by the previous dictators I just wonder how Pres. Jonathan can transform the economy to redress the economic imbalances and poverty (with over 40% of the population living below poverty line) in this populous and politically divided country. He really doe have a lot of work cut out for him including getting rid of corruption and crime, while put infrastructure and provide more amneable housing, free health services and free education for his countrymen.

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Loko P 

Nov 8th 2011 3:53 GMT

The problem with Nigeria is too complex to be narrowed down to a solution as simple as phasing out fuel subsidies. To start with, I am (hopefully) not the first to scream out the level of corruption in Africa, and with Nigeria standing in first place in the race of corruption and capital flight out of sub - Saharan Africa, one wonders what good eradication of fuel subsidies will do for the poor citizens of the country. In years past, we have seem Nigerian leaders take out huge loans from the IMF and World bank all in the name of making the country better economically but these loans end up in the hands of private bodies and end up leaving the country in the form of capital flight. Phasing out fuel subsidies will only do one thing and that is, hurt the poor Nigerian at the pump. On the other hand, selective private bodies will end up with the money gotten from the removal of fuel subsidies and do well in sending the money overseas to private bank accounts in Swiss or finance their multi - million dollar houses in the UK and or US. It sounds like a cliche today to say the corruption within the Nigerian government is so high that trusting any government official is like placing ones hand into fire and not expecting a burn but the reality is staring us in the face and the future of Nigeria is now.

Nigeria should have enough money as a member of OPEC to cater to the basic needs of its citizens, needs as basic as law and order and health care but these basic needs have been bought in abundance for the wealthy leaving the poor at the mercy of death. So with basic needs out of the picture, I really do not see the possibility of any 'real' good coming out of the removal of fuel subsidies in Nigeria.

If I was in the position of Mr. president, Goodluck, I would rather think of helping jump start the power ministry in Nigeria first and give the country electricity. Nigeria as a rainstorm in the middle of a desert will do excellent if provided with constant electricity (as this would be a historic turn uphill in the economy).

Finally, talking about fuel and subsidies in Nigeria, one would be wise to ask: how are the refineries in Nigeria faring? Maybe instead of directly taxing the poor masses in the form of subsidy cuts, the government should tax other avenues like raise corporation taxes and increase income tax for its citizens (a progressive tax system) and enforce it by law. Maybe these would financially help jump start some of the dead refineries in the country and help create jobs and thus help the Nigerian economy but I strongly would advice the Nigerian government to shy away from any form of fuel subsidy cuts as this might lead to a chaotic Nigeria.

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mikey16@vt.edu 

Nov 8th 2011 21:59 GMT

To me, this article is sad. This country has so much potential and it is being shot down with the poor leaders in charge. They are a corrupt group who make the people believe in change and reform but never come through. They are an oil rich country how has the opportunity for a better economy and more importantly they have the chance to give the people a better life. The living conditions that people are forced to live in are inexcusable for a country which such potential. All the blame can not be put on Jonathan though, Nigeria has had a long line of corrupt rulers.